Rajhans Construction Pvt. Ltd. Vs ACIT (ITAT Surat)
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) confirming an addition of ₹1.50 crore under Section 68 of the Income-tax Act in respect of an unsecured loan received from Avi Exports. The assessee also challenged the reopening of the assessment and other consequential issues.
The assessee, engaged in the business of construction and development, had filed its return for Assessment Year 2007-08, which was originally accepted under Section 143(3). Subsequently, the assessment was reopened on the basis of information received from the Investigation Wing, Mumbai, following a search conducted on the Rajendra Jain Group and other entities. According to the Assessing Officer, the search revealed that the group was engaged in providing accommodation entries, including bogus unsecured loans. The assessee was identified as a beneficiary of an alleged bogus unsecured loan of ₹1.50 crore received from Avi Exports, a proprietary concern of Rajendra Jain.
During the reassessment proceedings, the assessee produced confirmation from the lender, PAN, return of income, bank statement and other documentary evidence to establish the identity of the lender, genuineness of the transaction and creditworthiness. The assessee also pointed out that the loan was received on 16 October 2006 and repaid on 6 February 2007 through banking channels along with interest. The Assessing Officer nevertheless held that the transaction was an accommodation entry based on statements recorded during the search and made an addition of ₹1.50 crore under Section 68.
